California faces billionaire tax battle as unions push back against governor opposition

Meta chief Mark Zuckerberg, valued at an estimated $208 billion or £159 billion, could soon face an unexpected £8 billion bill due to a proposed billionaire tax in California. The Service Employees International Union United Healthcare Workers West recently launched a campaign to introduce a oneoff five percent tax on any individual residing in California with a net worth exceeding $1 billion. The measure aims to bridge a $100 billion shortfall triggered by significant federal healthcare funding cuts that followed recent policy changes under President Trump.

The proposed tax focuses on an exclusive pool of around 200 billionaires based in California, each facing an average charge of $500 million. The tax would assess wealth as of 2025 and apply to any billionaire residing in the state as of 1 January 2026, regardless of relocation within that year. This structure is intended to close loopholes and prevent an exodus of the state’s wealthiest residents immediately after implementation.

Advocates, including economics professor Emmanuel Saez and former US Labour Secretary Robert Reich, argue that the tax is both practical and necessary to avert a healthcare crisis characterised by mass layoffs and hospital closures. They view California’s move as a potential blueprint for wealth taxation globally, with similar discussions underway in New York where new city leadership is advocating increased taxes on high earners. SEIU’s confidence in public support is buoyed by internal polling, historically reflected in broad approval for national wealth tax proposals.

Opponents, including Governor Gavin Newsom, dismiss the proposal as poor policy. Newsom, a long-time ally of unions, is reportedly at odds with the plan, citing concerns that such taxation could jeopardise California’s business climate. Critics argue that imposing tough additional taxes on billionaires may drive further high profile business departures from the state, intensifying an ongoing trend seen with the exits of major firms including SpaceX, Palantir and Oracle to other states with more favourable tax environments.

The debate has triggered an alignment of powerful interest groups on both sides. Political strategists linked to Governor Newsom have formed a committee to campaign against the ballot initiative, with support from unnamed business and technology leaders. Simultaneously, other progressive groups and unions are pushing for related tax measures, including extensions of existing tax surcharges on high incomes and new local taxes targeted at top earning chief executives.

With unions confident of strong grassroots backing and at least 875,000 signatures required for the measure to appear on the November 2026 ballot, the stage is set for a high stakes battle. The result is likely to influence not just California tax policy, but also the future direction of the Democratic Party as its leadership assesses political risks and policy priorities amid diverging party factions.